For Publicis, the Sapient acquisition could be summed up in one word: India. The $3.7 billion the company paid for the Boston-based agency in November was 40 percent more than the company’s trading price at the time. But right from the outset, agency leaders put India at the front and center of the deal.
“We shall have a very robust home base in India,” Publicis CEO Maurice Levy said on the fourth-quarter earnings call following the deal. “In other words, a market which by 2015 will be No. 2 on networks and mobile, and unique expertise in global distribution campaigns.”
What Levy is referring to specifically is the Indian arm — the embodiment of a modern ad production system that solves many of the biggest production challenges and gives Sapient a serious competitive edge among clients who are, more than ever, focused on the bottom line. There are about 8,500 people across four Indian offices at SapientNitro, about 65 percent of the company’s total global headcount.
The Indian marketing services arm is not a typical offshoring service, common among shops looking to cut costs by sending, for example, rendering, or VFX to cheaper labor markets. Instead, Sapient has methodically built out a workflow model that Sanjay Menon, SapientNitro’s marketing services lead for India, said combines labor savings with an approach that puts the Indian team at the beginning of the process. “As more clients start wanting to do more global campaigns, you need a hub that’s the network switch, the center,” said Menon. “That’s us.”
Menon described by way of example a client of Sapient’s that was doing a marketing campaign featuring a microsite, emails and banner ads. A team in Europe, in the client’s local market, came up with the core concept, with the India team listening in. Then, the assets are sent to Sapient offices in Noida, Gurgaon and Mumbai to be developed.
“We get the team from India to already be part of the initial conversation so it’s not a relay race,” said Menon. “Our model thus stands head and shoulders above others’ because we don’t make it a purely commoditized thing.” Sapient declined to provide names of actual clients that have work coming out of India, citing privacy and a “secret sauce.” But executives familiar with the company say it’s also a perception problem for clients: “Despite the reality of the operation, people often dismiss any production being done overseas as a cheap, offshore solution,” said one CEO.
Sapient will also take Indian employees to different offices for periods of time so they become as much part of the wider agency as possible. “In this model, if you end up being inefficient you end up being really inefficient,” said Menon.
“Sapient will bill itself as a McKinsey-esque player in the business of digital,” said one ad agency CEO who didn’t want to be named. Another echoed that, saying that Sapient’s big strength is its sprawling India offices, with thousands of employees work (the company has grown through hiring, not acquisition) is a smart solution that cheapens production without sacrificing on quality.
Maurice Levy, speaking during the Q4 earnings call said that SapientNitro doesn’t just have a “rear base for the purposes of production” in India, but also local engineers, and it can recruit entry-level people to help clients do other things, like go omni-channel, provide consulting practices and other actual creative.
Of course, the affordability and breadth of talent helps: Sapient’s annual filing at the beginning of 2013 showed that only 15 percent of its operating expenses were incurred by subsidiaries using the Indian rupee, which means Sapient pays relatively cheaper rates for salaries in India. Menon also said that the access to the talent pool is unparalleled, especially with younger people who are digitally native. (India has the world’s largest youth population, with approximately 356 million people between 10- and 24-years-old.) The agency hires a motley mix of skillsets, from programmers to design people. “It’s a young team and that’s good because they want to know digital marketing production and have quicker uptake.”
Often, Indian employees are asked to work on brands that don’t exist in their markets, or stuff they’ve never used before. An entertainment client of Sapient’s that didn’t exist in India now has a number of fans among the agency’s employees because of that approach, he said.
“My sense is this is a long-term play,” said Menon. “This isn’t something where you turn on and turn off the tap. The thing that worries me is making sure we have the right orientation and as we scale, the right offering.”
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